K Kanagasabapathy

Interest payments are a significant component of expenditure of the central government. A substantial amount, nearly one-fifth to one-third of tax collection of the Government of India, is accounted for by interest payments. In 2014–15, interest payments were 3.3% of the gross domestic product. In 2015–16, net interest payments (difference between the interest payments and interest receipts) pre-empted over 34% of the revenue receipts. High interest payments can shelf other developmental activities due to non-availability of funds. It is, therefore, imperative to examine measures to reduce interest payments. This paper explores two approaches to reduce interest expenditure incurred by the central government inflation indexed bonds and restructuring of existing debt.

I joined the research department of Reserve Bank of India (RBI) in September 1977, but I did not have an opportunity to personally meet S S Tarapore (SST) for about 11 years, till December 1988, as I was away from the department working with the Agricultural Refinance and Development Corporation/...

The Government of India has gone against the spirit and content of the comprehensive recommendations of the 2013 report of the Financial Sector Legislative Reforms Commission. It has revised the commission's draft Indian Financial Code (which had its own pluses and minuses) with a second draft code which, among other things, will lead to a greater centralisation of powers with the government and a weakening of the independence of the Reserve Bank of India. This is best illustrated in the recommended composition and powers of the Monetary Policy Committee. The finance ministry cannot hide behind the claim that this is a draft code; the revised draft IFC has been drawn up within the ministry.

A discussion of the long-standing proposal to establish a Public Debt Management Agency that would be independent of the central bank. There is need for a separation but there must be greater clarity than at present on the independence the agency will enjoy from the central government.

The Central Statistics Office's advance estimates of GDP in 2013-14 place growth in the year at 4.9%. The regular differences every year between the advance and revised estimates of GDP suggest that the former will be modified either upwards or downwards when the final figures come in about two years hence. This is somethingthe CSO needs to look into though there are definite reasons for why the revisions take place, leading to more accurate estimates. The new series of GDP at basic prices is also discussed here.

Reviewing the policy responses of the Reserve Bank of India over the past few years, it is argued that in recent times the RBI has sent mixed signals to the market. On the one hand a reduction of the marginal standing facility rate made funds cheaper for banks, but on the other, two successive hikes in the repo rate suggest a tightening of monetary policy. If the RBI's current approach to the twin challenges of reining in inflation and stimulating growth continues, the market will remain on tenterhooks

The Reserve Bank of India has in its attempt to control the exchange rate volatility of the rupee perplexed the market. The short-term measures announced to limit money market liquidity went against its accommodative medium-term stance, causing considerable uncertainty in the market. In hindsight, they seem to have hurt the financial system as a whole.

There is a fear that the current vulnerabilities on the balance of payments front signal another crisis as in 1991. This article analyses the factors underlying the current problems in the BoP and points out the key differences and also a few similarities between the state of the Indian economy then and now.

With the global recovery nowhere in sight, this note looks at alternative strategies available to India to bridge the widening current account deficit by playing to the strengths of domestic production systems and through diversifying trading partners.

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